Brian Leiter and Paul Caron both recently noted a study by Adam Chilton, Jonathan Masur, and Kyle Rozema which argues that law schools can increase average faculty productivity by making it harder for tenure track faculty to get tenure. While this seems plausible, denying tenure more often is no free lunch.

A highly regarded study by Ron Ehrenberg (published in the Review of Economics and Statistics) found that professors place a high monetary value on tenure, and a university that unilaterally eliminated tenure would either have to pay more in salary and bonus or suffer a loss in faculty quality. After controlling for faculty quality, university rank, and cost of living, university economics departments that are less likely to offer faculty tenure must pay untenured faculty more, in part to compensate for increased risk. Reduced tenure rates is associated with higher productivity, but it is costly.

It's easy to understand why. A promising candidate with offers from otherwise comparable universities A and B would be unlikely to take an offer from A knowing that A denies tenure 70 percent of the time while B only denies tenure 10 percent of the time.

Faculty who are untenured and at an institution with high tenure denial rates would also have strong incentives to spend their most productive years avoiding publishing anything that might upset private sector employers who could give them a soft landing in the event that they are denied tenure. Quantitative measures of faculty "productivity" based on number of citations and publications don't capture the harmful qualitative shift this would produce in faculty research, particularly in an area like law.

There are numerous other advantages to tenure (and disadvantages to weakening it), which I've discussed here and here, including protecting intelletual freedom, encouraging faculty to share rather than hoard knowledge, promoting investment in specialized skills, aligning faculty and institutional incentives, increasing the rigor of teaching and improving outcomes for students (compared to use of adjuncts).

Given the links between higher tenure denial rates and higher faculty compensation, universities could probably achieve much the same objective by simply increasing merit pay tied to productivity. Highly ranked law schools could also avoid hiring at the entry level and focus on hiring under-placed laterals, allowing lower ranked institutions to absorb sorting costs.

Universities aren't just competing with each other for entry level hires. They compete with private sector employers who can offer much higher pay, better resources, and more attractive exit options. Universities' attract candidates by offering an environment that is more conducive to creativity and independent thought because of minimal hierarchy and strong job protections.

Unless a law school has a large pot of money ready to increase faculty compensation, increasing tenure denial rates is risky business.

While Chilton Et al. estimate the benefits of denying tenure, they don't estimate the costs. That's a serious limitation.